A Europe For Humans, Not Just For Markets.

The common market has been a core idea of Europe but markets are not automatically beneficial for all human beings. Europe needs to re-establish the “primacy of politics” and push for the democratization of the economy.

Europe has always been both a community of values and a pragmatic economic endeavour. In recent years, however, the economic dimension seems to have had the upper hand. In many ways, the “single market” has been a success. But at the same time, there have been backlashes: nationalist and anti-EU politicians have been on the rise, with Brexit and the Catalan independence movement as the tip of an iceberg.

Suddenly, the European project looks very fragile. While the causes of this crisis are complex and multifaceted, one core problem seems to be that Europe has relied too much on its market: economic growth was supposed to bring about integration and social justice all by itself. But there is no “invisible hand” in markets and “trickle down” is a myth. Markets only function as well as the framework within which they operate. It is this framework that requires the EU’s attentions.

Markets create winners and losers – what does Europe
do for the latter?

It is true that markets, if well-regulated, can increase the wealth of societies. But market dynamics can be disruptive and they create not only winners but also losers: some industries or regions benefit, others are outcompeted and go into decline. If a larger pie is created, it can serve to compensate those whose jobs are gone and whose welfare has declined – but only if the winners share some of it with the losers.

John Rawls, the famous American philosopher of justice, has formulated the “difference principle”: economic inequalities can be justified if they are for the benefit of everyone, and especially of the least advantaged members of society. This is one of the justifications for the welfare state. But there is also a pragmatic insurance argument in its favour: we cannot anticipate who will win and who will lose, so we all participate in a scheme that ensures that no one will be hurt too badly.

While markets have been Europeanized, welfare systems remain a national affair. But in the long run, the most logical step would be to create a social insurance system – at least in the sense of a social minimum – at the European level as well. After all, for insurance systems it is beneficial to operate on large scales, spreading the risks more widely and thereby lowering the costs of insurance. This would allow individuals to see a tangible benefit of being an EU citizen, which reaches them directly, rather than through the funding of regional development projects or other indirect channels. They would know that they will not be left out in the cold if the tides of the market turn against their industry or their region. This would give a concrete meaning to the slogan of “European solidarity”.

Strengthen economic democracy

Many individuals fear that the cold winds of economic globalization have made their lives insecure. “Take back control” was one of the most popular slogans during the Brexit campaign. But it makes much more sense for Europe to take back control – control over markets and, in particular, control over transnational corporations that can put pressure on nation states and that avoid taxes wherever they can, escaping the responsibility to contribute to the costs of public infrastructures.

What can Europe do here? The democratic control of markets can take two forms. First, Europe needs to strengthen the primacy of politics: democratic decision making must set the framework of rules within which corporations operate. This framework must put the public good before private interest and it must ensure a level playing field in which everyone has a fair chance – instead of “the big nobs” siphoning off profits, while everyone else suffers, which creates a hotbed for “anti-elitist” populism. Second, Europe can strengthen the democratic control of markets from the inside out: by giving employees a voice in corporate decision-making, by supporting cooperatives, worker-owned companies and co-determination.

Europe should not try to impose a homogeneous culture on nations; after all, its cultural diversity has been and continues to be one of its great strengths. Instead, Europe should focus on putting its economic house in order. This requires a sober analysis of its structures: which aspects of economic regulation are best organized at the European level, which ones should be left to nations (or regions, or communities). In a globalized world, the EU is probably the best bet for creating a framework that makes markets serve societies, rather than the other way round. And in the long run, if the point of being part of a European economic framework, which puts individuals before markets and secures social justice, becomes more obvious, this might also be the best bet for taking the wind out of the sails of anti-EU populism.

Prof. Lisa Herzog
Assistant Professor for Political philosophy and theory,
Bavarian School of Public Policy